Sept. 25 (Bloomberg) -- Life Partners Holdings Inc. and its
Life Partners unit won a ruling by a Texas judge that the
interests it sells in life insurance policy settlements aren’t
securities covered by state law.

Judge Stephen Yelenosky denied state Attorney General Greg
Abbott’s bid for an order blocking the Waco-based businesses
from selling those policy interests after a two-day hearing at
the Travis County District Court in Austin. Yelenosky said he
would issue a written order later.

Abbott alleged in a lawsuit last month that Life Partners
was deceiving buyers of the settlement interests about the life
expectancies of people insured under the policies. The company
denied those claims and said two prior courts had already
decided the securities issue in its favor.

“I don’t think this is a security under Texas law,”
Yelenosky said before hearing any defense testimony at today’s
proceeding. “Maybe I understand why it should be a security,
but that’s not the question,” he said.

State attorney Jennifer Jackson argued before the judge the
life settlements that Life Partners markets to investors are
securities and that investors need the protection of the Texas
Securities Act.

Previous Courts

Defense attorney Elizabeth Yingling countered by saying two
previous courts -- a state appeals court and a federal circuit
court in Washington -- had ruled the policies aren’t securities.
She said the policies are governed by the Texas Department of
Insurance.

State attorneys presented witnesses to try to show that
Donald Cassidy, who provided life expectancy estimates for Life
Partners Inc., came up with estimates significantly below what
others in the field would have given. But Yingling said
expectancy estimates vary because of the availability of
different medical records and other factors.

“Just because they’re shorter doesn’t mean they’re
wrong,” Yingling said during her questioning of a witness.

Scott Peden, president of Life Partners Inc. and general
counsel of Life Partners Holdings, said after the hearing,
“We’re very pleased with the result and are pleased to see that
justice was done.”

Will Appeal

Peden and Chief Executive Officer Brian Pardo were also
named as defendants in the attorney general’s complaint.

Abbott will appeal the ruling, his spokeswoman, Lauren
Bean, said in an e-mailed statement.

“Life Partners is charged with defrauding thousands of
investors in violation of the Texas Securities Act,” Bean said.
“The defendants are attempting to evade state oversight by
arguing that its products are not securities -- a claim that is
inconsistent with prior U.S. Supreme Court precedent.”

The case is Texas v. Life Partners Holdings Inc., D-1-GV-12-001128, District Court of Travis County, Texas, 201st
Judicial District (Austin).